Sorry (Poor) Kids: The Road From Rags To Riches No Longer Passes Through College

Tyler Durden's picture

... at least statistically speaking. Yes, outlier cases will always exist and there will always be a rags to Geology 101 to riches story somewhere, but as the following fascinating and very much damning (the entire higher learning industry of the US) diagram from Reuters demonstrates, colleges, in their once vaunted role of a "great equalizer for the classes" as defined over a century ago by Horace Mann, no longer exist.

The chart in question?

What does the above chart imply? Nothing more than that for the vast majority of people, college degrees are the modern-day equivalent of very, very expensive snake oil.

Yes: colleges are sold to you as the critical stepping stone on the path to wealth and prosperity, but sadly the empirical evidence demonstrates that when it comes to an actual, demonstrable income effect, only the wealthiest people actually benefit from a degree! The lowest fifth of household by income see their change in income decline by 10%, while the middle fifth sees an incremental 2.1% drop. Where do incomes rise? When you are already wealthy and belong to the highest fifth of households by income: there, going to college boosts your income by an additional 15.1%

And since for the great majority (excluding the richest of course), a college education is funded by even more implied poverty, i.e. debt, which is merely the opportunity cost of future income and wealth, the simply math works out as follows: college - a tool for making the rich richer, the poor poorer, and virtually everyone (excluding the richest, again, of course) a debt slave into a system that beguiles impressionable youths with dreams of money and power, and cheap low interest private and Federal student loans, only for the illusion to shatter upon graduation and all those wonderful jobs demanding a piece of paper procured in exchange for 4 years of debt-funded classes, turn out to have been a mirage all along...

In short: the only hope for a great many people is nothing but a debt trap.

From Reuters:

Just to stay even, poorer Americans need to obtain better credentials. But that points to another rich-poor divide in the United States. Educators call it the scholastic "achievement gap." It has been around forever, but it's getting wider. Lower-class children are getting better educations than before. But richer kids are outpacing their gains, which in turn is stoking the widening income gap.

 

"Now, we're in a situation where we need to educate everyone at the level of the elite in the past," said Paul Reville, Massachusetts secretary of education. "We don't have a system to do that."

 

It's an academic arms race, and it can be seen in the sharply contrasting fortunes of Weston, a booming Boston suburb, and the blue-collar community of Gardner, where a 20-foot-tall chair sits on Elm Street as a monument to the town's past as a furniture-manufacturing hub.

 

* * *

 

This correlation between educational attainment and financial fortune is clear statewide. In the bottom fifth of Massachusetts households, the average income dropped 9 percent in the past 20 years to $12,000. They fared worse despite a sizable gain in educational attainment: The share of people 25 and older in the group with a bachelor's degree rose to 18.5 percent from 11 percent.

 

The same thing happened to the middle fifth. Their average income slipped 2 percent to $63,000. The share of adults with a bachelor's rose to 43 percent from 29 percent.

 

But the top fifth saw their average income leap 17 percent, to $217,000, as their education levels soared far higher. Three-quarters had a bachelor's, up from half. Fully 50 percent had a post-graduate degree, up from a quarter.

 

* * *

 

"All the evidence shows that children born to two highly educated, high-income people tend to obtain the highest level of academic achievement," said Sum. "At the bottom, where the mom is not that well-educated and tends to have lower income, children tend to do worse."

 

* * *

 

Curtis Dorval, works at Walmart as well. When he was a senior at Gardner High School, Curtis was class president. He was accepted by Northeastern University, a private school in Boston.

 

But Northeastern cost $50,000 a year, which Curtis, then 17, felt he couldn't afford. Instead, he enrolled last year at the state-run University of Massachusetts Amherst, studying mechanical engineering. With the help of a scholarship for graduating in the top quarter of his class, Curtis paid $10,200 a year.

 

He got some help from his father, who had saved up $10,000 in stocks and bonds from his days in the hospital job. This summer, that money ran out and Curtis left UMass to enlist in the Air Force. He will serve as an airman - and hopes to use military benefits to pay for parttime university classes.

 

"The main reason was I needed a way to pay for college," he said.

Most don't go that route: most opt for cheap, low-rate debt. Debt which as of this moment, merely at the Federal level has by now surpassed $1 trillion, and which, as we reported first, and as subsequently was confirmed by the media, is seeing its delinquency rate explode, now that the clash between hope and the sad jobs reality is front and center for ever more once hopeful students.

Just like with the "gun-control" debate, there is no simple solution.

Tanner Skenderian, president of this year's Weston High graduating class, joked in a speech about her town's hyper-competitive students. "Welcome to Weston, where third graders take AP Physics, middle-school students sleep for 42 minutes a night, and the most competitive race run by the 2012 boys state champion track team was the race to get the cookies in the cafeteria," she said.

 

Competition in high school was fierce. In one advanced placement physics class, she said, six of the 12 students were the children of professors at MIT, America's premier science university.

 

But Tanner thrived there. She also found school to be a source of support after her father died while she was in middle school. This fall, she headed to Harvard, after spending the summer interning at the governor's office. Given the job market, she said she may apply to business or law school after graduating.

 

Weston, in short, gave her an education that raises her odds of joining her mother - who owns a marketing and event-planning company - at the top of America's economic ladder. 

 

"We're very fortunate that we're rather affluent," she said. "We have more opportunities, more technology, more classes and more teachers."

And that's just it: if you are affluent, if you had opportunities, you will still and always be successful, and college will merely emphasize this. For everyone else, degrees are rapidly converting into an almost instantly amortizing piece of paper paid for with tens of thousands of student debt which, incidentally, is non-dischargeable.

Unfortunately, and just like with "gun-control", the fundamental issue at hand is not education, not even the pursuit of the American Dream (or lack thereof), but the gradual realization that the myth of American exceptionalism is just that. And in a world as globalized and interconnected as ours, breaking from the middle (or, heaven-forbid) lower classes, into the upper strata os society is becoming virtually impossible.

It goes without saying that any society in which class mobility is shunted, and in which classes (already engaged in class warfare based on wealth, sex, race, religion, background, job, or any other vertical that served America so well during its "melting pot" days) are denied even the ability to dream and hope of improving their lives through hard work (either current, or deferred - and prepaid for by student loans) is one whose days are numbered.